Reddit stock drops sharply after weak sales forecast and login plan

Stock Drop

Shares of Reddit fell thirty percent on Friday. This marks the worst daily drop for the company since it became a public company. The drop beats the previous record low set on July thirty-first when the stock fell twenty point nine nine percent.

Sales And Traffic

Reddit projected fourth-quarter sales between one billion dollars and one point zero three billion dollars. This falls below analysts' estimates of one point zero five billion dollars. Reddit reported third-quarter sales growth of fifty-three percent over last year. CEO Steve Huffman said search referral traffic from Google went down meaningfully this quarter due to Google's AI Overview. Multiple analysts downgraded the stock after the report.

Login Changes

Reddit announced plans to test requiring users to log in to see content. This change aims to boost logged-in users and help the advertising business. Citizens noted that search changes highlight problems with selling content to Google. Huffman stated that Reddit is the last platform to provide unfettered logged-out access and called the move a sign of the times.

Context

Social media platforms rely heavily on search engine traffic to bring in new visitors and keep advertising revenue high. When search engines change how they display information or direct users, it can directly impact a platform's growth and financial results.